Cotton drops as China’s economy falters

General Comments:Futures were lower again on what appeared to be long liquidation from speculators and perhaps some farm selling. The rally in the U.S. dollar and disappointing economic news from China late last week caused the selling interest to develop once again. Ideas of better weather in U.S. production areas were once again negative for prices. Some storms are moving through western Texas and conditions there are improving. Good weather is being reported in the Delta and Southeast as well. The weather has improved, and looks to improve conditions generally through the rest of the week. Scattered showers are forecast for the Delta and Southeast, and wetter and warm weather is expected in Texas. Weather for Cotton appears good in India, Pakistan, and China.

Overnight News: The Delta and Southeast will see some light showers this week. Temperatures will average above normal. Texas will get dry weather. Temperatures will average above normal. The USDA spot price is now 81.3409 ct/lb. ICE said that certified Cotton stocks are now 0.574 million bales, from 0.562 million yesterday. ICE said that 116 notices were posted today and that total deliveries are now 116 contracts.

Chart Trends: Trends in Cotton are down with no objectives. Support is at 85.10, 84.75, and 84.55 October, with resistance of 87.10, 88.20, and 89.60 October.

FCOJ

General Comments: Futures closed lower. Futures have been working generally lower as showers have been seen and conditions are said to have improved in almost the entire state. Ideas are that the better precipitation will help trees fight the greening disease. No tropical storms are in view to cause any potential damage. Greening disease and what it might mean to production prospects continues to be a primary support item and will be for several years. Temperatures are warm in the state, but there are showers reported somewhere in the state every day now. The Valencia harvest is continuing but is almost over. Brazil is seeing near to above normal temperatures and mostly dry weather, but showers are possible next week.

Overnight News: Florida weather forecasts call for showers. Temperatures will average near to above normal.

Chart Trends: Trends in FCOJ are down with objectives of 141.00, 133.00, and 130.00 July. Support is at 139.00, 137.50, and 136.00 July, with resistance at 145.00, 146.50, and 150.00 July.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

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